138 innovations

Pay-As-You-Go Airline

Taking a cue from the cellphone industry, an upstart South African airline is selling flights by the minute and allowing customers to buy tickets and book flights via text message.

Airtime Airlines takes to the sky later this month, offering three flights a day from its base in Durban to Johannesburg, Cape Town and Port Elizabeth. Passengers purchase minutes much like they would for a prepaid cell phone and redeem them for a ticket. Fees are assessed according to the length of the flight - say, 75 minutes for the run from Durban to Johannesburg - and could save as much as half of what competing airlines charge.

Topping off accounts is where things get interesting. The cost for Airtime minutes can fluctuate, presumably according to promotions and market factors, so topping off becomes an exercise comparable to fuel hedging. Buy a big block of minutes when you think they're at their cheapest and you look smart, unless the price drops again the next day. Then again, it might go up. The price recently rose from 3 Rand to 5 Rand, meaning the cost of a round-trip flight from Durban to Cape Town climbed from about 750 Rand ($81) to 1,250 Rand (about $134). Still that's cheaper than the $200 it would cost on South African Airlines.

Source: blog.wired.comAdded: 9 January 2009